EXPLAINING THE PRIVATIZATION BOOM: PUBLIC CHOICE VERSUS RADICAL APPROACHES

Abstract

Public choice theories of bureaucracy, especially the budget maximization thesis, have been influential in stimulating the drive towards privatization in Britain and the USA. But these accounts are strangely silent about why changes in state agency practices have come about under‘new right’ governments. They apparently attribute the scope of change entirely to‘virtuous’ political direction overcoming previously inherent features of bureaucratic behaviour and democratic politics. By contrast, a radical reconstruction of instrumental models of bureaucracy explains the privatization boom in terms of the primacy of bureau‐shaping motivations in the welfare functions of policy‐level bureaucrats. Privatization is seen as a development of earlier strategies (such as the separation of control and line agencies, the creation of‘dual state’ structures, and automation) by which the class interests of senior bureaucrats have been advanced at the expense of rank and file state workers and service recipients. An examination of divergences in the internal and social costs of public agency functions explains why legislators and policy‐level bureaucrats (especially in control agencies) push ahead with the‘inappropriate’ privatization of public service delivery systems where overall social welfare is reduced. Copyright © 1986, Wiley Blackwell. All rights reserved